Goldman Sachs snippet with their USD/JPY outlook
- "Activity data have looked more resilient over the past week, including upside surprises in ISM manufacturing and nonfarm payrolls. If the trend continues-possibly nudging the FOMC toward a fourth 50bp rate increase in September-we think USD/JPY has room to move moderately higher," GS notes.
- "That said, the extent of upside still looks limited by official intervention risks and (eventually)pressure on YCC, as domestic growth and inflation pick up this year alongside higher global yields (if the US avoids recession)...As a result, we continue to think that being long Yen represents an attractive way to position for that base-case outcome and are keeping our short USD/JPY trade recommendation in options open," GS adds.
Via eFX.
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Yesterday Bank of Japan Governor Kuroda was emphatic in his denial of any need to tighten monetary policy. He was also unconcerned about the weak yen:
- Weak yen pushes up both export and import prices, so its impact on terms of trade is roughly neutral
